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80/20 Business Process Optimization Process Training Improves Employee Focus, Profitability, and Customer Value for Athletic Equipment Manufacturer
With the help of: Illinois Manufacturing Excellence Center (IMEC)
About
The Challenge
Our big take away is to pay attention to the data and then focus resources on the customers and projects that are the most profitable. Rethink those customers and projects that do not offer a worthwhile return. For us, that meant phasing out some products. It seems pretty basic, and it is, but sometimes we get emotional attachments to customers, products, or projects and disregard what the data is telling us.
MEP's Role
In August 2017 Litania enlisted IMEC to fine tune what they had learned and strengthen its deployment of the 80/20 Business Optimization Process. The training proved to be a success for Litania in 2017, as it was in 2016. For zero-based budgeting to be successful, the employees needed to be on board and have a full grasp of zero-based budgeting, the 80/20 principle and how it applies. This would allow them to focus more on high profitability projects and not so much on one-off projects. Mary McGrew, VP of Human Resources noted “Once you learn 80/20, it’s kind of hard to go back. You have a new mindset. It’s best to focus on things that are more profitable and don’t spend time on the non-profitable.” The Litania team wanted to keep its focus on the Pareto Principle, customer satisfaction and profitability.
As a result of the 80/20 training for two consecutive years, Litania saw favorable outcomes. They were able to eliminate an entire division because it did not bring value to customers and was therefore not profitable. This allowed leadership to free up resources and make room for more profitable items in other divisions. In addition, the employees responded well to the training. They learned how to work with challenging customers, and as a result are less frustrated.